LVMH Moët Hennessy Louis Vuitton has recorded a 16% Q1/2015 revenue increase to €8.3bn ($8.7bn), reporting ‘a complex situation in Asia’ for DFS and a ‘stagnant’ three months for Wines & Spirits (-1%).

 

There were nevertheless good starts to the year in terms of ‘reported’ increases for the Louis Vuitton and Hennessy brands, plus Champagne, Fashion & Leather Goods (+13%), Perfume & Cosmetics (+16%) and Watches & Jewelry (+19%) and Selective Retailing (+20%) divisions – with growth in the latter referring mainly to the international Sephora business. Adverse currency conditions were a big challenge in the trading period however.

 

The Louis Vuitton ‘growth machine’ continued to shine in both European and the US markets, but LVMH said that Wines & Spirits were ‘penalized by the end of the destocking in China’.

 

It added that this business recorded ‘stagnant organic revenue’ in the first quarter of 2015 (see table) as a result of this destocking, although Hennessy Cognac delivered an overall volume increase thanks to its market leadership in the US and other spirits brands such as Glenmorangie single malt and Belvedere vodka, continued to show growth.

 

Most notably, Champagne apparently experienced a good start to the year with solid volume growth.

 

 

GOOD COMPARATIVE FASHION GROWTH

LVMH said that its biggest division – Fashion Leather Goods – showed growth, although it was competing with ‘a very high comparable’ first quarter trading period in 2014.The Fashion & Leather Goods business group grew despite the very high comparable period in 2014.

 

It also pointed to ’strong creative momentum’ from Louis Vuitton from ‘its legendary lines’, alongside many new products unveiled at its most recent shows. LVMH also said that the Fendi, Céline, Givenchy, Kenzo and Berluti brands all returned ‘excellent’ first quarter results.

 

Meanwhile, Perfumes & Cosmetics returned the third highest ‘reported’ growth rate of all LVMH’s divisions at 16%, with the luxury goods group pointing to more ‘good momentum’ from Christian Dior thanks to J’adore and Miss Dior and an ‘excellent performance’ from the make-up segment.

 

LVMH also noted that Guerlain continued to introduce its new L’Homme Idéal fragrance, while opening its new Chartres-based production facility dedicated to skincare and make-up. Other brands mentioned were Benefit, which apparently performed well and Fresh, and Make Up For Ever, which are said to be expanding rapidly.

 

 

‘CURRENCY AND GEOPOLITICAL’ NEGATIVES

For its part, the Watches & Jewelry business group recorded organic revenue growth of 7%, with Bvlgari reported to be in ‘good growth’, thanks to its ‘iconic’ jewellery collections and its new Lvcea watch for women. Hublot also started the year well while LVMH said that TAG Heuer ‘continued to refocus on its core offering’.

 

[The company added that LVMH watch brands introduced several innovations at the recent Basel watch fair where a partnership between TAG Heuer, Google and Intel was announced to launch a smartwatch-Ed].

 

Last, but not least, LVMH’s second largest business unit of Selective Retailing reported mixed results, as LVMH stated: “DFS continued to be faced with a complex situation in Asia and has been impacted by currency and geopolitical developments in certain tourist destinations’.

 

[This will doubtless be linked to less Chinese tourists visiting Singapore and more cautious spending in Hong Kong–Ed].

 

Having said that, LVMH described Sephora’s domestic market retail performance as ‘remarkable’, as it continued to gain market share in all regions.

 

 

SEPHORA MARKET STRENGTH

It added that its same-store revenue growth was particularly strong in North America and the Middle East in the first quarter, while online sales are said to have expanded ‘very rapidly’.

 

In conclusion, LVMH said it will continue to focus on brand development and strict cost controls and aim its investments at maintaining quality, excellence and innovation amongst its products and their distribution.

 

[LVMH also reported that its first quarter results corresponded to ‘organic’ revenue growth of 3% compared to the same period in 2014. This is a measure that assumes comparable structure and constant exchange rates – in this case an exchange rate impact of +13%. Organic ‘results’ by division can be seen in the company’s Revenue by business group chart-Ed].